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U.S. Fed chair confident in U.S. economy ahead of policy rate meeting

Xinhua, December 3, 2015 Adjust font size:

U.S. Federal Reserve chairwoman Janet Yellen on Wednesday expressed her confidence in the U.S. economy, saying that she was "looking forward" to an interest rate hike.

"On balance, economic and financial information received since our October meeting has been consistent with our expectations of continued improvement in the labor market." Yellen said in a prepared speech at the Economic Club of Washington on Wednesday. "Continuing improvement in the labor market helps strengthen confidence that inflation will move back to our 2 percent objective over the medium term."

Yellen said she expected the U.S. economy to continue current moderate growth pace over the next several years, which will be sufficient to generate additional increases in employment, further reductions in the labor market slack, and a rise in inflation.

She downplayed factors that were holding back the U.S. economic growth this year, saying that these factors, such as strong U.S. dollar, weak foreign growth, and lower oil prices, will diminish in the next couple of years "as the global economy improves and the adjustment to prior declines in oil prices is completed".

She said that downside risks from abroad have lessened since late summer. "Recent data support the view that the slowdown in the Chinese economy ... will likely continue to be modest and gradual. China has taken actions to stimulate its economy this year and could do more if necessary," Yellen said.

Yellen did not indicate whether she still expected that a rate hike would be warranted at the Fed's policy meeting on Dec. 15-16. But she said she was "looking forward" to the day for interest rate hike as the economy has recovered substantially since the Great Recession.

"When the (Fed's policy setting) Committee begins to normalize the stance of policy, doing so will be a testament ... to how far our economy has come," Yellen said. "In that sense, it is a day that I expect we all are looking forward to."

Analysts believed that Yellen's speech on Wednesday could be seen as a sign that she is ready to raise interest rates later this month, preventing a surprise in markets or the economy. Investors were already expecting the Fed would lift the benchmark rate this month from current 0 to 0.25 percent range where it has held since 2008. Endit